Class 11 Chapter 10 TIME VALUE OF MONEY

 

Practice Question No. 1  [Advance Saraswati Publication]

Calculate Future value of :

i) An initial Rs. 500 compounded for 2 year at 7 percent.

ii) An initial Rs 500 compounded for 10 years at 12 percent.

iii) An initial Rs. 500 compounded for 10 year at 6 percent. 

[Ans:  i. Rs. 572.45 ii. Rs. 1552.90 iii. Rs. 895.40 ] 

Practice Question No. 2  [Asmita's Publication]

Find the future value of the following:

i. 1000 compounded for 2 year at 14 percent 

ii. Present value is Rs. 2250 for 30 year at 12 Percent.

iii. Future value at 9 percent at 16 year of Rs. 9310.

iv. Future value of present sum of Rs. 99,500 compounded at 6 percent for 5 year.

[ Ans: i. Rs. 1299.60 ii. Rs. 67,409.78 iii. Rs. 36,963.49 iv. Rs. 133,150.90]

Practice Question No. 3  [KEC Publication] 

a. If you deposit Rs. 10,000 in a bank account that pays 10 percent interest annually, how much money will be in your account after 5 years ? 

b. your parent will retire after 18 years, They currently have Rs. 250,000 , and current market interest rate is 8 percent. How much money they will receive at the time of retirement ?

c. If you deposit Rs. 1000 in a bank account that pays 10 percent interest per year. How much money would you have in one year?

[ Ans: a. 16,105.10  b. Rs. 9,99,004.87 c. Rs. 1100 ] 

Practice Question No. 4  [Asmita's Publication]

a) Calculate present value of Rs. 65000 due in year 5 if discount rate is 8 percent

b) What is the present value of Rs. 122,500 due in 7 years using discount rate of 10 percent?

c) If future value is Rs. 51,557 time period is 8 year and interest rate is 12 percent

[ Ans:  a) Rs. 44238.75 b) Rs. 62,862.42 c) Rs. 20822.70]

Practice Question No. 5  [Advance Saraswati Publication]

i. Calculate the present value of security that promises to pay you Rs. 10,000 in 10 years. Assume that you can earn 6 percent if you were to invest in other securities of equal risk?

ii. You need sum of Rs. 50,000 at the end of two year from now. If you can get an annual interest rate of 11 %. How much you need to deposit today to get required sum in two years?

[ Ans: i. Rs. 27,920.48 ii. Rs. 40,581.12]

Practice Question No 6   [ Mixed ] 

Find the Present and Future values of following:

i. Future value of todays Rs. 100,000 at 15 percent interest rate compounded for 10 years.

ii. what is the present value of security that will pay Rs. 5000 in 20 years securities of equal risk pay 7 percent annually?

iii. Assume that it is now Jan 1, 2019, and you will need Rs. 120,000 in Jan 1, 2023. Your bank compounds interest at as an 8 percent annual rate. How much you deposit on January 1, 2020 to have balance of Rs. 120,000 on  January 1, 2023?                        HINT

[ Ans: i. Rs. 404,560 ii. Rs. 1292.09 iii. Rs. 95,260.78] 

Practice Question No. 7  [Asmita's Publication]

a) If Present value is Rs. 7,257 Future value is Rs. 15000 and time period is 8 year find the interest rate.

b) Calculate the rate where Rs. 46,523 becomes Rs. 255,810 in 30 year.

c) An investor purchased shares of a company for Rs. 50,000 and sold these shares for Rs. 96,270 after 5 years. Find out the annual rate of return on investment.

[ Ans: a) 9.5 %  b) 5.85 %  c) 14 %]

UNEVEN CASH FLOW

Practice QN : 1

Calculate Present value and future value of the following cash flows if the appropriate interest rate is 12%

Year	Cash flow Y	cash flow Z
1	200	1000
2	300	500
3	100	200
4	1000	100
5	500	300

 

Practice QN : 2

Find the Present values and Future values of the following Projects under following conditions

Year	Project 1	Project 2
1	200	1000
2	400	800
3	600	600
4	800	400
5	1000	200

 

i)                    If the appropriate interest rate is 10%

ii)                   Calculate the values of interest rate is 15%

iii)                 what is the values of each projects at 6% interest rate

Practice QN : 3

Calculate the PV and FV of the following cash flows

Year	Cash stream i	Cash stream ii
1	500	1000
2	500	200
3	500	400
4	500	600
5	500	300

 

i)                    If the appropriate interest rate is 11%

ii)                   Calculate the values of interest rate is 16%

iii)                 what is the values of each projects at 8% interest rate

Amortization schedule

Q.n. 1   (Asmitas publication 10.44)

Mrs. Rita Subedi borrowed Rs 25,000, 10 percent, 5-year loan that is to be repaid in equal instilments at the end of each year for the next 5 years. Set up an amortization schedule for the loan.                                                                     [PMT: Rs. 6,594.91]

Q.n. 2      (Asmitas publication 10.45)

Sharmila Just borrowed a loan of Rs 35,460 from Everest Bank Ltd. The loan is to be repaid in 4 equal installments at the end of each of the next 4 years, and the interest rate is 5 percent. Find out the amount of periodic payment and set up an amortization schedule for the loan.                                                                                                                                                                

 [PMT: Rs. 10,000]

Q.n. 3     (Asmitas publication 10.46)

Pratikshya borrowed a loan of Rs 86,000 in an auto loan from Sanima Bank Limited. The loan is to be repaid in 3 equal installments at the end of each of the next 3 years, and the interest rate is 5 percent.

Required:          a. Annual payment on the loan

                            b. Set up an amortization schedule for the Loan                                                                               [PMT: Rs. 31,580.49]

Q.n. 4

you are planning to borrow Rs. 250,000 for your new business on 5 year, 18 %  fully amortized term loan. Prepare Loan repayment Schedule.                                                                                                                                                                 [PMT: 79,943.72]

 

Q.n. 5

Samir just borrowed Rs. 79,854 from NIC Asia Bank Limited, for 5 Year 8 % repayment agreement on annual payments basis. Prepare Loan repayment schedule.                                                                                                                                                     [PMT: 20,000]

 

Q.n. 6

Prepare amortization schedule for five year loan of Rs. 42,000. The interest rate is 12% per year, and loan calls for equal annual payment.                                                                                                                                                                                     [PMT: 11651.13]

 

Q.n. 7

Dhangadhi cyber decided to buy a high quality Printing Machine on Loan of Rs. 1,50,000 for 4 year from Kathmandu Suppliers. The Loan bears a compound annual interest rate of 12 % and calls for equal annual payments at the end of each year for 4 year. Prepare Amortization schedule                                                                                                                                               [PMT: 49,385.96]

 

Q.n. 8     (KEC publication  Q. No. 30)

The management of Nepali Patra Ltd. decided to buy a Printer by taking a loan of Rs 100,000 for 3 years from City Bank Limited. The loan bears a compound annual interest of 10 percent and calls for equal annual installment payments at the end of each of the 3 years.

a. What is the amount of annual payment?

b. Prepare a schedule showing the fraction of interest and principal payment for each year.

 C. What fraction of payment made in year 2 represents the principal?                                           [Ans: a. Rs 40,210.7041; c. 82.64%]

 

Q.n. 9     (Model Question 2077)

You are planning to borrow Rs. 1000,000 on a 5-year, 12% annual payment fully amortized term loan.

a. What is the annual payment on the loan?

b. What fraction of payment made at the end of second year will represent the payment of interest?

C. What fraction of payment made at the end of third year will represent the repayment of principal?

d. What would be the amount of interest and principal paid in the final year?

     [ Ans: a. 277407.9  b. 36.45 % c. 71.17 % d. 29723.52 , 247684.4 ]

Q.n. 10

The management of Campaign for Peace in Nepal Limited decided to buy a printing press by taking a loan of Its 1,500,000 for 4 years from Peace Cooperative Limited. The loan bears a compound annual interest rate of 12 percent and calls for equal annual installment payments at the end of each year for 4 years.

a. What is the amount of annual payments?

 b. Prepare a schedule showing the fraction of interest and principal payment for each year.

c. What fraction of payment made in year 2 represents the principal?                                               

d. What fraction of payment made in year 4 represents the interest?                    

[Ans: a. Rs. 493,859.68  c.  71.18 % d. 10.71 %]